Germany set out plans to create a government committee to step in quickly to protect companies against foreign takeovers, a sign of concern about China and others acquiring its technology.

German Chancellor Angela Merkel and German Finance Minister and Vice-Chancellor Olaf Scholz were present during the debate in the Bundestag, the lower house of parliament, on Friday in Berlin prior to the votes on the federal 2020 budget.

The finalised industrial strategy outlined by Economy Minister Peter Altmaier is also intended to prevent the erosion of Germany’s manufacturing base, on which much of its wealth is built.

The new standing committee would, as a last resort, have powers to take stakes in German companies that produce sensitive or security relevant technologies.

The government stakes, which would be acquired by state development bank KfW, would be held temporarily. This can already be done in some cases under German law, but Altmaier said the process was too slow.

“Structures have to be created to take the necessary decisions faster and more efficiently than has been the case thus far,” he said in his “Industry Strategy 2030” document.

Altmaier told a news conference the standing committee would work with KfW but there would be no new state funding vehicle to take government stakes in companies.

He met resistance from business lobby groups when he presented his initial ideas in February.

“I do not want to expand the state sector,” Altmaier said.

The strategy document did not say which companies should be protected. In February, Altmaier singled out marquee companies Thyssenkrupp, Siemens and Deutsche Bank.

The drive to protect and promote Germany’s industry coincides with a lull in the economy, Europe’s largest, which is losing momentum following a decade of robust expansion.

There are also growing protectionist trends worldwide, with Washington and Beijing embroiled in a damaging tariff dispute, and uncertainty surrounding future trade relations between Britain and the euro zone.

Under Altmaier’s plans, Germany also aims to step up screening of non-European investors that want to buy into firms in important sectors, a move widely seen as targeting Chinese state-backed investors.

The European Union is reconsidering its industrial strategy and relations with China in the face of increased investment in critical sectors by Chinese state-owned enterprises.

Beijing is pushing the domestic development of technologies including electric cars and has been buying know-how abroad through acquisitions, including of German robotics maker Kuka.

German officials the takeover of Kuka in 2016 as a wake-up call that underlined the need to shield strategic parts of the economy, and KfW stepped in when China’s State Grid attempted in 2018 to buy a stake in power grid operator 50Hertz.

Germany plans to screen non-European investors that want to buy into firms in high-tech sectors such as robotics and artificial intelligence in a move widely seen as targeting Chinese state-backed investors.

The measures, outlined in a document seen by Reuters, are part of a new industrial strategy announced by Peter Altmaier.

While China is not mentioned in the document, German and European Union officials have repeatedly said they want a fair playing field with China, which they accuse of shielding its own companies from foreign investors.

“The economy ministry has worked out a further amendment to the law under which we will extend the screening possibilities and define a catalogue of critical technologies,” the document said.

“The government must be able to take a closer look, for example, if national security interests are affected by foreign investments,” the paper said.

Under the new rules, investors in sectors including artificial intelligence, robotics, semi-conductors, biotechnology and quantum technology would have to make public any purchases of 10% or more and allow Germany to check them.

Previously, only investments in critical infrastructure, such as energy, water, telecommunications and defence could be screened. Last year, the government dropped the investment threshold for those sectors to 10% from 25%.

The German move comes at a time the EU as a whole is reconsidering the bloc’s industrial strategy and relations to China in the face of increased investment in critical sectors by Chinese state-owned enterprises.

Reuters